How to Reduce Carbon Intensity Through Renewable Energy Production

Despite the recent politicization of environmental, social, and corporate governance (ESG) initiatives, most companies recognize the dire need for action against climate change. In fact, according to the Index Industry Association’s 2023 ESG Survey, 81% of global asset managers are increasing ESG investments.

Extra attention and investment are sorely needed because the environmental outlook is bleak. The Organisation for Economic Co-operation and Development predicts global greenhouse gas (GHG) emissions will double by 2050 if the world doesn’t take action, primarily due to a 70% growth in energy-related carbon dioxide emissions.

But we can take action.

Increasing the production of renewable energy sources is one of the most practical measures we can take. Governments worldwide recognize the need to reduce GHG emissions and incentivize renewable energy production through credits.

Ethanol producers can lower their GHG emissions and thus potentially improve profitability since fuels are rated and valued based on their Carbon Intensity (CI), the amount of energy used to produce a fuel stream. Veolia Water Technologies & Solutions is a partner to many producers, helping them create renewable fuel. Water and Process treatment can be a key to unlocking available incentives and producing these fuels with minimal disruption to operations. In fact, a recent Veolia evaporator treatment for fouling has reduced the CI for an ethanol plant by 1.5 g CO2e/MJ.

Refiners and importers must meet stringent annual targets called Renewable Volume Obligations (RVOs) for the carbon intensity of the fuels they sell. Those that exceed the RVOs may sell their excess credits, and those that fall short must buy enough credits to make up the difference.

Economics of production

The market is growing quickly — according to the Energy Information Administration, the capacity for renewable diesel production could more than double by 2025 to nearly 400,000 barrels per day. But how that fuel is produced is an important consideration.

A lifecycle analysis of carbon intensity covers everything from the origin to finished tailpipe fuel and how much energy it took to produce. For a fuel to qualify for low-carbon fuel standards (LCFS), the intensity must be below 50% of the baseline fuel. A petroleum-derived diesel fuel has a carbon intensity of ~ 100. Some renewable fuel carbon intensity scores can be below 10.

Feedstock sources, like animal or vegetable oil or minerals, play a significant role in determining carbon intensity. If you use a feedstock that requires land use, like soybean oil, it’s competing with food that needs to be farmed, fertilized, and harvested. That incurs a hefty penalty for indirect land use, putting it above the threshold to be considered low-carbon.

However, using the cooking oil for its intended purpose first makes it a waste stream. At that point, it has a lower carbon intensity because it doesn’t require land and can be used to produce renewable fuel.

Incentives for producing renewable fuel

Federal programs like Renewable Identification Numbers (RINs) have jolted the production market by making blended fuel tradable through RIN credits. For example, if you make a barrel of renewable diesel, you qualify for a $70 credit to offset your petroleum diesel or sell on the open market.

The Blending Tax Credit, part of the Inflation Reduction Act, generates a $1 tax credit for each gallon of pure biodiesel or renewable diesel produced or used in the blending process. In California, Oregon, Washington, and Canada, a low-carbon fuel standard is driven by carbon intensity. More states are looking to implement LCFS moving forward.

There are also tax incentives for producing sustainable aviation fuel (SAF), which can be significantly higher than other renewable fuels. According to the Government Accountability Office, the U.S. produced 15.8 million gallons of SAF in 2022, less than 0.1% of the total jet fuel used by major U.S. airlines. The International Air Transport Association set a lofty net-zero carbon emissions target for 2050. Just to achieve 10% SAF production by 2030, we’d have to increase the production of SAF by 3,400%.

How Veolia can help

Producing renewable fuel is no easy task and can come with challenges, so it’s important to work with a trusted and knowledgeable partner to help you meet your goals. Veolia has several capabilities to help, from wastewater treatment to corrosion control to technical support and performance assurance.

For instance, Biothane® Advanced UASB (Upflow Anaerobic Sludge Blanket) is a high-performance, low OPEX biological wastewater treatment technology that can reduce carbon intensity. Over the past 40 years, Biothane technologies have been installed in more than 550 facilities worldwide to enhance the production of soy and biodiesel.

Fouling control is another area of Veolia’s expertise, keeping heat surfaces clean so heat transfer is as efficient as possible. One customer avoided four shutdowns over 12 months, creating $22-30 million in additional revenue, and Veolia helped lower its carbon intensity score to increase profits by $1-2 million.

Contact an expert to learn how we can help your efforts to process renewable fuel.